Recent Recession in the UK

If not monitored properly and not acted upon proactively, a recession may continue beyond the normal business cycles and may become a depression as well (B. Abel Bernanke, 2007). The fall in prices, economic activity, employment levels, consumption, and GDP are some factors which when combined can be the major cause and main source of the recession.Despite the financial crunch that the world had recently faced, the reality is that the governments of the developed economies such as that of UK and USA have been unable to route the increased government expenditures into the right direction. otherwise, the recession would have been avoided at the first place or ended quickly but critical decisions and fault in their policies brought negative repercussions. The recent recession hit many industries and left them in bad shape in the UK. Among those seriously crippled by the recession include the Steel industry, automobile sector, retail industry.Steel which had been considered as a very precious metal in the early 1990s has been losing its shine now. Overcapacity and surplus supply in the industry, falling demand, and increasing fragmentation have been an obstacle to the growth of this core sector of the economy. The way that technology today is attracting a huge number of entrepreneurs in the economy is an incontrovertible proof that steel had always been a profitable sector. Large numbers of corporates were actually inspired and promoted but the main problem was that most of them had lacked financial backing (Lingwood, 2010).Steel being a capital-intensive industry requires huge capital and financial investments. Most companies thus ran a high debt exposure, borrowing form a portfolio of financial intermediaries and institutions. The steel market was booming and as a result a lot of new projects were flourishing at a high pace. Consequently, capacity had been augmenting quicker than the demand. This complemented with the recent industrial slowdown and slump in economic growth worldwide has widened the demand-supply mismatch much further.